Treasury Inspector General for Tax Administration

Press Release

The IRS's Collection Fraud Referral Program Could Identify More Fraud, TIGTA Finds

WASHINGTON – An Internal Revenue Service (IRS) program designed to refer tax fraud cases for criminal investigation could improve the identification and development of additional fraud cases, according to a new study publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).

TIGTA conducted an audit to assess the effectiveness of the Collection Fraud Referral Program, and whether the Collection function is adequately considering, identifying, and developing fraud cases for referral to Criminal Investigation.

The program, a joint venture between the IRS’s Fraud and Collection Policy offices, successfully develops quality criminal fraud referrals, TIGTA found. However, auditors found that opportunities exist to improve its identification and development of fraud referrals.

“Tax fraud is a deliberate and purposeful violation of Internal Revenue laws by those who do not file and properly report their income and expenses,” said J. Russell George, the Treasury Inspector General for Tax Administration. “When criminal fraud penalties are not adequately pursued, the IRS’s efforts to reduce the Tax Gap can be undermined. Those who do not voluntarily pay their share of taxes create an unfair burden on taxpayers who timely and fully pay their taxes and can diminish the public’s respect for the tax system.”

Among the report’s findings, TIGTA found that revenue officers may be deterred from looking for fraud because fraud cases are more complex, require extensive additional work, and often do not result in accepted referrals. In addition, technical assistance was not always available to revenue officers, and management efforts to support fraud development varied.

TIGTA made three recommendations for improvement; the IRS agreed with TIGTA’s recommendations and plan to implement them.

Note: The difference between the date TIGTA issues an audit report to the Internal
Revenue Service and the date TIGTA publicly releases the report is due to TIGTA's internal review process to ensure that public release is in compliance with Federal confidentiality laws.

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